Tool 9: Consumer Advisory Panels

Consumer advisory panels are a tool that a market conduct supervisor (MCS) and other authorities use to elevate the collective voice of consumers in financial sector regulation and supervision. For this toolkit, a consumer advisory panel is defined as a group of experts in the consumer and financial sector, or other relevant industries such as telecommunications, that engage with an MCS to discuss and share information on financial sector policies and emerging consumer risks. The members of consumer advisory panels bring diverse perspectives from civil society, academia, legal aid, and government backgrounds to inform the work of the MCS. Financial service providers (FSPs) and journalists may also participate. The panel membership composition will depend on the purpose and objectives that the MCS has identified for the panel. It is important for the MCS to make concrete efforts from the outset, to ensure that the panel includes members who represent the interests of the most vulnerable and disadvantaged population segments and that the panel is led and organized in a manner that ensures that the voices of those segments are effectively heard. 

Benefits and opportunities

• Deeper insights on consumer risks and issues. Input from consumer advisory panels facilitates a more nuanced understanding of consumer protection, financial inclusion, and customer experience issues.
• Reliable and timely flow of information to the MCS. Regular, ongoing engagement with a consumer advisory panel allows the MCS to deal with issues proactively before they become more serious.  
• More balanced view of the financial sector. Given that FSPs tend to have greater influence than consumers in the financial sector, the MCS can gain a more balanced perspective of the opportunities and issues in the sector by getting direct insights from consumer representatives through a consumer advisory panel that is effectively chaired.  
• Better financial sector policies. Consumer advisory panels with strong consumer advocate representation allow for strong citizen engagement with policy makers and regulators. Citizen engagement is, in turn, associated with higher-quality regulation and greater economic development. Advisory panel discussions can also inform the strategic priorities of the MCS. 
• Platform to disseminate information. Advisory panel engagement effectively disseminates information on new policies and risk areas to consumer advocates and the public. 
• Access to external feedback. Consumer advocates and the public can discuss and obtain feedback on proposed policies, regulations, guidance, or consumer awareness initiatives through advisory panels.
• Increased accountability and credibility of the MCS. Transparent engagement with the panel enhances MCS accountability, credibility, public confidence, and consumer trust in formal financial services.
• Capacity building for consumer advocates. Panel participation can help build the skills of consumer associations and their representatives, where experience in financial services or advocacy are low. 
• Manageable implementation and resource commitment. The investment of staff time and financial costs of administering an advisory panel is modest relative to other market monitoring activities.

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Characteristics of this tool

CGAP research identified several common characteristics shared by consumer advisory panels. Examples of some of these are provided in Table 1. 

• Legal basis for engagement. Sound legal footing gives the panel authority and credibility. The MCS typically establishes the advisory panel by law or regulation or through its statutory convening powers to serve in an advisory or information-sharing role. Terms of Reference (TORs) or a charter give structure to the relationship. 
• Regular interaction and formal agendas. Most advisory panels convene several times per year in regular meetings and working groups. Agenda topics are prioritized and set in advance, typically in coordination with the advisory panel chair. Panel members are welcome to share and discuss issues bilaterally with the MCS between meetings. 
• MCS staff and financial support. The MCS provides support for staff and other costs to administer panel activities. Staff time is usually part of overall duties, rather than a standalone job. Technical materials such as presentations and reports can be delegated to panel members or other MCS subject matter experts. 
• Clear member selection criteria. Some MCSs use an open application or expression of interest, while others invite specific candidates based on an internal vetting process. Either way, criteria should be transparent and objective, with latitude to achieve the right balance of expertise, experience and varied representation of groups to include different genders, races or locations, for example. The number of members can vary widely, from 5-30 individuals.
• Specific member qualifications. The MCS seeks members with a good mix of financial services and consumer protection expertise, and some include FSPs and the media. Members can serve individually or represent a consumer association, legal aid, government, or academia. Panels that include FSPs have demonstrated that direct concerns or feedback provided by consumer advocates to FSPs firsthand is more impactful than an MCS serving as a go-between. 
• Remuneration of advisory panel members. The MCS reimburses advisory panel members for travel to attend in-person meetings. Most pay a modest honorarium or stipend, as well, for the time and effort spent in preparing for and actively contributing to panel meetings. This is especially important to ensure that potential members are not excluded solely due to the cost of participating. Compensation may be higher for members who devote additional time to working groups and other activities. 
• Effective leadership by the Chair. Chairs are responsible for effectively facilitating panel activities, and prioritizing issues, including leading controversial or challenging discussions in a collegial manner, ensuring that the voices of all stakeholders—especially those representing the most vulnerable and disadvantaged segments—are heard. Chairs are also responsible for promoting constructive dialogue with the MCS. Independent Chairs, who are not an MCS staff or management team member, are most common and helpful. 
• Elevation of vulnerable consumer voices. While advisory panels deal with issues affecting all consumers, members need to ensure that the unique needs of vulnerable consumers are addressed as they are less likely to be heard on their own. Advisory panels can also be a good platform to engage with female leaders and consumer advocates to raise awareness of gender-related issues. 
• Transparency. Most advisory panels publish an annual report of their activities, ranging from a separate publication to a brief mention in the MCS annual report. Some MCS staff post meeting agendas, minutes, and transcripts on their websites. Some advisory panels also open meetings to the public.    

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How to use this tool

The key to effectively using this tool is to start with a good foundation, build the engagement model and team, and integrate and evolve the consumer panel over time. Start small and don’t try to do everything at once. Some authorities may find it helpful to conduct a pilot to test different approaches. Certain activities—such as building relationships and a strong organizational culture, recruiting effective members, and managing priorities—will continue throughout the life of the panel. 

The process of implementing the tool could be sequenced in the following steps: 

STEP 1: 

LAY THE FOUNDATION

1. Provide a sound legal basis: Providing a legal basis for the engagement ensures clarity, credibility, and continuity of advisory panel activities. For some examples of laws relating to setting up consumer advisory panels, click here. Creating an advisory panel by statute or using MCS convening powers are both effective approaches. The legal basis should be formalized in a TOR or Charter. Click here to view an example. 

2. Establish clear purpose and objectives: Having a clear purpose and objectives helps ensure that expectations and obligations of MCS and consumer panel members are realistic. Consider questions such as: “What do we need to know that we don’t know already?” Or: “How can panel engagement improve our financial consumer protection work?” Knowing your 'why’ will make other decisions such as membership, budget and priorities easier. This will also help define the scope of stakeholder landscaping if the MCS chooses to do one (see Box 2). 

3. Instill a customer-centric, listening culture and tone from the top: Advisory panel engagement must be taken seriously at all levels of the MCS. This may require a change in organizational culture if interacting with consumers and advocates does not come naturally. The adoption of a customer-centric approach to financial consumer protection, which focuses on customer outcomes in regulation and supervision, would facilitate the adoption of such cultural change. MCS leadership should attend meetings and listen to consumer concerns with the same focus and attention given to the financial industry. MCS must be willing to take constructive criticism and have productive disagreements, so that the panel is not just providing a rubber stamp or seal of approval.  

4. Build relationships: The MCS does not need to wait until the panel is launched to start building relationships. Talking to existing contacts in the sector informally and getting information flowing will help identify the landscape of issues and potential consumer advisory panel members. After the panel is created, MCSs should continue to meet informally with members, for example through check-in calls, or by meeting for coffee, to strengthen relationships and the flow of information.

5. Seek peer support: The MCS may find it helpful to work with another authority that has an existing advisory panel to serve as a mentor and sounding board when considering various design features. South Africa’s Financial Sector Conduct Authority (FSCA) did this as part of their consumer panel pilot (see Box 1). 

6. Understand the stakeholder landscape. Having good knowledge of key stakeholders in the consumer landscape will help identify participants who will have the relevance, capacity, and interest to participate in the advisory panel and increase understanding of the main consumer protection issues. A stakeholder landscaping exercise may help (see Box 2).

STEP 2:

BUILD THE ENGAGEMENT MODEL AND TEAM

1. Define roles and responsibilities: MCS staff, consumer panel Chair, and advisory panel member roles and responsibilities should be clearly defined in writing. This will form the basis for the TOR or Charter, annual funding and other resource commitments, and membership recruitment. Sample TORs and charters are provided here.

2. Estimate resource requirements: 

• MCS staff and budget: Internal resources used to administer the panel are often part of broader staff responsibilities and departmental budgets, but it will be helpful for an MCS with limited resources to define these clearly, to ensure that the panel is sustainable in the long-term. 
• Member compensation. The budget should include the cost of member travel to meetings. In addition, reasonable meeting honoraria show appreciation for members’ time and effort—-including for preparation in advance of meetings—and may encourage more economically diverse participation. 

3. Recruit effective members: 

• Size. The panel should be small enough to have meaningful discussions, but large enough to be representative of the interests and needs of different groups, including consumers in situations of vulnerability who are susceptible to harm. This is a good “test and learn” area, where it is better to start small and grow the panel based on needs and experience. 
• Attributes and skills. While each advisory panel is as unique as its country context, members do share common characteristics. Box 3 lists those most frequently cited in CGAP research. For sample member recruitment materials, click here. Member bios are provided on some of the advisory panel webpages. For some examples, click here. 

4. Manage priorities and logistics: 

• Prioritizing topics. Meetings should cover significant issues. The MCS and panel chair can work together to decide the best use of panel members’ time and address other matters in a working group or other interaction, such as by email. Even if not considered a priority, comments and issues raised by panel members should always receive a timely response. 
• Meeting materials and logistics. Meeting packets should not be too technical or long. MCS will need to determine preferences regarding in-person versus virtual meetings. Hosting and attending in-person meetings is more time-consuming and expensive, but the interactions are usually more robust. A combination of virtual and in-person may be the best approach.

STEP 3:

INTEGRATE AND EVOLVE

1. Integrate into the FCP toolkit: The advisory panel should not be siloed. In addition to informing policies, insights gleaned from panel engagement can be a valuable qualitative tool in the FCP toolkit to validate and deepen other sources of information, such as complaints data, social listening, consumer research, financial education programs, and other monitoring and supervisory tools. For example, if there is a concerning trend in complaints, the MCS can ask panel members: “What are you seeing or hearing?”  

2. Help build participant capacity: Panel engagement can be used to build the capacity of consumer advocates in countries where this is lacking. For example, the MCS could recruit some small consumer associations as members rather than just the largest or most vocal ones. Bringing together consumer associations with different resources and experience levels can facilitate knowledge sharing and exposure to diverse perspectives on financial consumer protection issues and approaches to dialogue with the MCS. Panel meetings and public events can also be used to clarify roles and mandates of different regulators and disseminate information on new products or provider types. 

3. Track and report activities and outcomes: The MCS should track and report outcomes—including anecdotal outcomes—and be transparent about panel activities. Results can be shared via annual and ad hoc reports; meeting agendas, minutes, and transcripts on the MCS website; and inviting the public to meetings, if appropriate. When consumers and other stakeholders see efforts by the MCS to listen and respond to issues, it will build confidence and trust in the panel and its work. For examples of meeting materials click here and for examples of annual reports, click here. 

4. Evolve with the financial sector and consumer risks: The financial sector is not static, so the mix of advisory panel members and topics addressed should evolve with financial products, providers, technologies and risks. The terms of reference and other foundational documents should provide sufficient flexibility to accommodate these changes. For example, some TORs establish that members are appointed for a term of two or three years, which may be renewed once or twice. 

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Limitations of this tool

• Complex impact measurement. Unlike most market monitoring tools, consumer panels are a qualitative tool that may also require the MCS and consumer representatives, which typically have different skills and expertise, to put significant effort into effectively communicating with each other to ensure that consumer insights are understood and properly incorporated into the MCS’s work. As a result, the relationship between panel activities and improved financial sector oversight can be more challenging to quantify and take more time to materialize than for other tools. Clearly defining goals and tracking and reporting progress and results is important.
• Open-mindedness and political will. MCS staff and leadership may be reluctant to step outside their comfort zone to engage with consumer groups, or fail to see these interactions as relevant to their work. Setting a positive tone from the top and making sure staff understand the benefits of the engagement can help with organization-wide buy-in. 
• Consumer association capacity and visibility. If consumer associations and other advocates lack financial services knowledge and experience, it will be challenging for them to engage meaningfully and credibly in advisory panel work. Also, some EMDE consumer advocacy sectors are not well-organized or developed, so the MCS may not know who would be best suited for advisory panel work. These challenges would in turn demand greater effort from the MCS to build relationships (see step 1 above) before the panel is set up and during its early stages. 

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Other resources

• Consumers International. 2021. “The Role of Consumer Organisations to Support Consumers of Financial Services in Low and Middle Income Countries,” London: Consumers International. 
• Duflos, Eric; Peter Andrews and Myra Valenzuela, 2022. “Consumer Associations: A Major Player in Responsible Digital Finance.” CGAP blog post, 15 March. 
• Duflos, Eric; Mary Griffin and Myra Valenzuela, 2021. “Elevating the Collective Consumer Voice in Financial Regulation.” Working Paper. Washington, D.C.: CGAP.
• Newbury, Laura and Eric Duflos, 2022. “Consumer Advisory Panels: A tool to Bridge the Regulator-Consumer Gap.” CGAP blog post, 29 August.
• Newbury, Laura and Eric Duflos, 2022. “Consumer Advisory Panels: A tool to elevate the collective consumer voice in financial sector regulation and supervision.” Washington D.C: CGAP.

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